Sector-based ETFs

He-Man said:
Just wondering what you all think of investing a small portion of your portfolio in sectors rather than broad-based ETFs.
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These ETFs invest by and large in USD denominated equities, i.e. from the perspective of a euro investor, investing in them is investing in foreign developed market equities. Considering your total portfolio, if your asset allocation to foreign developed market equities is already met, why would you want to invest additional sums in this asset class? And if you are underinvested in foreign foreign developed market equities why would you want to invest in these particular subclasses of equities and not in say trackers of broad based fdm indices such as the S&P, FTSE AllShare, JP/Pacific etc.

The only reason for investing in asset sub-classes is if you believe by doing so you can capture excess returns over that of the asset class itself, by exploiting either (a) momentum or (b) value tilts.

And if you believe you can do this why would you buy an ETF? Why not invest directly in those equities that you evaluate can give you index beating returns?
 
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